- Besides itemized deductions, several other methods are used to pay for prescription expenses. A health reimbursement arrangement, paid by your employer, is not included in your income. Flexible spending accounts are paid in combination by you and your employer using pre-tax dollars -- not included in your income. Prescription expenses paid with distributions (withdrawals) from HRAs and FSAs cannot be itemized or deducted since they were not included in your income.
Distributions from Archer medical savings accounts and HSAs are deducted separately and cannot be itemized on Schedule A.
Distributions from HSAs and MSAs are reported on Form 1099-SA: Distributions from an HSA, Archer MSA or Medicare Advantage MSA. - Only prescription expenses that are included in your income are tax-deductible. Itemized deductions for medical expenses, including prescriptions, must exceed 7.5 percent of your adjusted gross income; if medical expenses are less than 7.5 percent, then they cannot be deducted. Prescription and medical expenses included in your income can be tax-deductible. This amount is reflected as income on Form W-2. Prescription expenses include co-pays or outright prescription costs and include FDA-approved imported medications.
- A prescription is a drug that is prescribed by a doctor, for a particular person, to alleviate or prevent symptoms of a medical condition. Except for insulin, over-the-counter drugs, vitamins, and nutritional supplements must have a prescriptions to be deducted. Illegal controlled substances (illegal drugs), including medically approved marijuana, cannot be deducted.
- Prescription and medical expenses paid with tax-free distributions may affect your itemized medical deductions. You cannot itemize medical expenses paid from tax-free accounts.
Medications illegally imported, ordered or shipped from other countries cannot be deducted. - This information is not meant to replace legal advice. Consult your accountant or tax professional for questions and advice.
previous post
next post